Big Tech hearings; More bank earnings; Ryanair’s Max problem

Posted at 3:15 AM, Jul 16, 2019
and last updated 2019-07-16 07:17:55-04

1. Tech grilling: It’s an important day in Washington for Big Tech.

The Senate will kick off two days of congressional hearings on Libra, Facebook’s new cryptocurrency. Also happening: a House hearing on antitrust issues among online platforms, which will feature representatives from Google, Amazon, Facebook and Apple.

Facebook executive David Marcus, who leads the Libra project, said in prepared remarks that Facebook is willing to delay its entrance into the cryptocurrency market to work with regulators. But that may not be enough to quell skepticism about the product.

Treasury Secretary Steven Mnuchin said in a press conference Monday that the US government is worried Libra could be used for illegal activities such as money laundering and human trafficking.

“We will not allow digital asset service providers to operate in the shadows,” Mnuchin said.

2. More bank earnings: The US banking sector remains in focus Tuesday with JPMorgan Chase, Wells Fargo and Goldman Sachs set to report earnings for the second quarter.

They’ll follow Citigroup, which shared stronger-than-expected earnings for the three months ending in June on Monday. That was in large part due to share buybacks.

Investors will stay vigilant for comments on credit quality and the health of the economy. They’ll also monitor the impact of the current interest rate environment, which has crimped profitability. The situation could worsen if the Fed cuts rates later this month.

At Wells Fargo, the focus remains on the company’s search for a new CEO to replace Tim Sloan, whose departure was announced 110 days ago.

3. Ryanair’s Max problem: Ryanair is taking the knife to its operations in Europe as it prepares for two years of disruption caused by Boeing’s 737 Max debacle.

Europe’s biggest low-cost airline said Tuesday that it was planning to cut back operations at some airports and abandon others entirely because regulators may not return the grounded 737 Max to service until as late as December.

Ryanair had planned its flight schedule based on the planned delivery of 58 of the aircraft by summer 2020. The airline, which can only take delivery of up to eight aircraft per month, now expects to receive only 30.

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4. Markets mixed: US stocks could rise on the heels of another round of record highs.

The Dow, S&P 500 and Nasdaq are all is set to open slightly higher, according to US stock futures.

Elsewhere, markets are more uncertain. European markets opened higher, with Britain’s FTSE 100 jumping 0.3% in early trading and Germany’s DAX rising almost 0.1%. Hong Kong’s Hang Seng rose 0.2%, but Japan’s Nikkei fell 0.7%.

Burberry shares rallied more than 8% in London after the company reported double digit sales growth in mainland China.

The Dow closed up 0.1% on Monday at a new record high of 27,359 points. The S&P 500 eked out a fresh all-time high of 3,014 points.

5. Coming this week:
Tuesday — US retail sales; Germany’s ZEW economic sentiment index; JPMorgan Chase, Wells Fargo, Goldman Sachs, Charles Schwab, Johnson & Johnson, United Airlines earnings
Wednesday — US housing starts and building permits; Eurozone inflation; Bank of America, eBay, IBM, Netflix earnings; US oil inventories
Thursday — Japan inflation; Morgan Stanley, Philip Morris, Honeywell, Microsoft earnings
Friday — American Express and BlackRock earnings; University of Michigan consumer sentiment